I have attached the updated version (please ignore earlier one) expectations from the upcoming budget from RICS – Royal Institution of Chartered Surveyors. These can be attributed to Mr. Sachin Sandhir – MD & Country Head – RICS India. The focus is on real estate & construction sector.
RICS outlines its expectations from the upcoming budget
Government’s explicit focus on housing and infrastructure is bound to benefit the real estate and construction sector in one way or the other. RICS believes that the Ministry of Finance would consider the proposals submitted by the Housing Ministry and increase the housing loan interest deduction limit to Rs 2.5 or Rs 3 lakhs p.a. along with lowering interest rates to 7.5% for loans in the range of Rs 5 lakh to Rs 30 lakh. Given the president’s aggressive target to make
· A dedicated fund for affordable housing
· Reintroduction of concessions under Section 80IB (10) of the Income Tax act (available until 2007), thereby encouraging construction of small units at affordable prices. This provision would allow deduction at 100% of the profits from a housing project that fulfills special conditions such as minimum plot area of one acre and maximum built-up area of 1,000 sq.ft for
· Waiver or reduction in stamp duty, value added taxes and other government taxes for economically weaker sections (EWS) and lower income group (LIG) housing
· Restoration of tax holidays for low-cost housing projects
As the industry’s wish list is multi-fold, other announcements likely to bring joy to the sector are:
· Further relaxation of ECB and FDI norms
· Rationalization of stamp duty and registration charges
· Confirmation on abolition of service tax on renting immovable property, already announced by the high court
· Clarity on extension of tax waiver for STPI units
· Extension of tax holiday under Section 80-IA (4) (iii) for developers who build industrial parks, which in turn would boost the otherwise impacted IT industry
Although we hope that levy of fresh taxes, which could adversely impact the sector are avoided, according to government sources, chances of the service tax increasing back to 12%, cenvat rate reversing to 10% and excise duty on steel and cement being brought back to 12%, are high. We understand that the finance minister’s task to balance between industry requirements and widening fiscal deficit will be challenging and trust that the decision would be taken after a careful consideration of all aspects.
From a more generic perspective, common expectations across industries include – abolition of fringe benefit tax (FBT), reduction in central sales tax, single unified Goods and Services Tax (GST) and reduction in corporate tax rate from the current rate of 33% to about 26%, in line with the global practices. However, barring FBT and single GST rate being considered at 12%, the remaining rebates seem unlikely to materialize, given the government’s shrinking revenue collection.
About RICS
RICS is the world’s leading professional body in land, property and construction with over 150,000 members in more than 146 countries practicing in 17 specializations. RICS is governed by a Royal Charter approved by the
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